Zoned for Success

In the late 1980s, having spent the better part of the decade developing and selling office buildings, Karl Wagner, CCIM, foresaw an oversupply in the office market and started looking at mini-storage development. As president of Wagner & Associates, Inc., in Richmond, Virginia, he wasn't looking for trouble-he just wanted to build a "nice, neat, clean, two-story, indoor, good-looking self-storage building." By the time it was all over, he had built an award-winning facility that, from some angles, looks more like a class A office building than a self-storage business.

But then, that was the whole point. Wagner's struggle to place the self-storage facility where the demand was ran up against the problem that many developers face in areas where residential and commercial make uneasy bedfellows. Residential neighbors raised a challenge to his zoning case. Rather than turning his back on their concerns, Wagner put the building's best face on its back-creating an aesthetically pleasing brickwork design-to soothe community objections. It was such a win-win solution that Wagner now counts some of the former opposition as tenants of the storage facility.

A Penny's Worth of Patience
Wagner's approach to zoning challenges combines patience and financial savvy. "My philosophy is you can lose these cases really quick; it takes time to win them." From the economic point of view, he adds, "If you're going to have a delay in a project, it's better to have it before you start because then you're not ticking away interest. If you get a month delay at the end of a project when you're carrying a $2 million construction loan, the interest gets kind of heavy. [With] a one-month delay during the zoning case, you're not paying any interest, so that doesn't hurt too much."

That's not to say a zoning challenge does not extract a price. This particular case carried a $47,000 price tag and a couple more months of time to find the solution. It also involved a little extra touch that appeased the family of the original landowners-indicating that commercial developers such as Wagner are often willing to go the extra mile to prove their worth as good neighbors.

The project began with Wagner's search for mini-storage sites. "We did an aggregate market analysis of the area and found five geographical holes in the market that we thought could be filled." The second site was a 1.2-acre piece of land, close to a busy intersection that was "right in the middle of the trade area," he says. Nearby was a 1.2 million-sf mall, two 150,000-sf shopping centers, almost 2,000 apartment units, and a high school. About 250 yards away, behind a wooded section of land, was a major residential development.

The property was zoned low-density residential, which is typical for that area of Richmond. "We're in conditional zoning here," Wagner says, "which means you can't take a piece of property and zone it for business and see what happens." In order to change the zoning, construction specifics must be proffered in a contract. If construction does not occur within a specified period of time, the property reverts back to the old zoning.

The property's location, which first attracted Wagner, also worked against it-two zoning cases in the past four years had been lost. "They had attempted to rezone the land for business use," he says, "first for a furniture store and then for an office building. Each time the county planning staff and the neighbors objected because of the amount of extra traffic the projects would generate at an already busy intersection."

However, Wagner figured a self-storage facility would probably add "a quarter [of the traffic] of an office building and probably 2 or 3 percent of what a furniture store would generate." To him, a self-storage facility made perfect sense for the area and the property.

Pieces of the Puzzle
A veteran of zoning challenges, Wagner followed a strategy that covers the three major pieces of the zoning puzzle-the county planning staff, the politician for the area, and the neighbors. "You need to haveat least two of those three pieces locked up and in favor of your project," he says. "Most of the time you need all three."

Before even putting the land under contract, Wagner met with the county planning staff to see if they considered his case reasonable. After their traffic engineers ran a few studies to determine the amount of traffic generated by self-storage, they agreed with Wagner that it was a good use of the property and probably would be acceptable to them.

Next Wagner approached the county supervisor in whose district the property was. "The politician is probably the most critical piece," Wagner says, "because other supervisors who vote on the zoning case will follow his lead." Once again, Wagner got the okay: "The county felt it was a higher and better use of the land that, in their words, took it to a higher tax base without generating the traffic that had been the main objection to the other projects."

Neighboring States of Mind
With those two pieces in place, Wagner went ahead and put the property under contract with plenty of time to get the zoning. The owner, he says, "was sympathetic to our case and gave us all the time we needed, because it was the only way he was going to sell the property."

Wagner knew there would be objections from the neighbors, so he arranged meetings with the neighborhood associations in the area. "We asked what their problems were and they said 'traffic, traffic, traffic.'"

With that problem resolved by the project itself, Wagner went ahead with the zoning case, not anticipating any further protest. "At our first main meeting with the planning commission," he recalls, "a couple of neighbors objected to the fact that they could see the facility through the woods that separated it from the residential development. And they were concerned that the back of a 'warehouse' might be objectionable."

Undaunted, Wagner mounted a strategy aimed at convincing the neighbors that during most of the year, when the leaves were on the trees, they would not see much of the building. "We went into their backyards, with permission, of course, and took photos of where our building was going to be." The idea was to show them how little of the building would be visible. "At most," he says, "all people were going to see through the woods was a glimpse of that building."

Back to the Drawing Board
But that tactic failed to change their minds completely. The community felt that self-storage facilities belonged in industrial areas, where, Wagner says, there is probably the least demand.

So he went a step further and redid his plans for the back of the building. "We decided to brick the back of the building with soldier-course brickwork and recessed panels. Overall it was a nice effect. We figured about $45,000 above regular costs to add the brickwork." He also had an artist do a second rendering-this time of the back of the building-"I don't know too many people who have done that," he says. Wagner went door to door showing neighbors the rendering. Their response? "They said, 'Why it looks just like an office building!'"

Yet even after that monumental effort, Wagner still had one holdout: a woman whose father had owned much of the land in the area at one time. "Her family had been there for many years, and slowly they had sold off the land until they only had a few houses left there. She was concerned that this was the last piece of green land on what used to be her family's land."

The response was emotional more than practical, yet Wagner recognized the need to meet such an objection in good faith. He lobbied the county to change the name of the road that ran alongside his project to Jesse Sr. Drive, in honor of the woman's father. "That," he says, "took care of the opposition."

The Outcome
After winning the zoning case, Wagner built the self-storage facility on schedule, and it opened for business in 1989. Because of the building's unusual design-it is built into a hillside, allowing direct access into both the first and second floors-Mini-Storage Messenger named the building "Facility of the Year" for new construction in 1993.

Wagner's original assessment of the demand for mini-storage in the area was correct; the facility draws tenants from the apartment complexes and businesses in the nearby retail centers. He sees it as particularly convenient for small stores that change displays often and need every foot of store space for display, not storage.

He figures the extra cost of the zoning challenge was about "$2,000 during the planning and getting the second rendering done, and then the $45,000 to put the additional brickwork in place. We actually brought the project in about 2 percent under budget, so part of that was recovered."

In terms of time, Wagner says it tacked on a couple of months during the planning stage. "We really did what you should do in these cases, which is allow time for one-on-one meetings with the neighbors and neighborhood associations. Because if the neighbors are against you," he adds, " you can pretty well wrap it up."